Why Libertarians Should Support Public Unions, not Scott Walker

The recent goings-on in Indiana and Wisconsin have exposed me to my free market friends. For years I’ve been able to get by without much question, never bringing up unions. This past week though I’ve come out of the pro-union closet and I’m here to say: If you respect the free market, freedom, and libertarianism… you ought to be pro union too. Or, at least, pro their right-to-do-business.

For the record, I want to say that I never advocate government interference in a market. Often unions have called on government to benefit them and this is wrong. What is equally wrong is seeing corporations do the same. Ayn Rand once said:

“It was business, not labor, that initiated the policy of government intervention in the economy (as long ago as the nineteenth century)—and business was the first victim. Labor adopted the same policy and will meet the same fate. He who lives by a legalized sword, will perish by a legalized sword.”

In using policymakers to shield themselves from the bargaining power of unions, companies and governments are intervening in the economy.

I think I should say that The Heartland Institute, and certainly most folks here don’t agree with the following line of reasoning. I don’t know why.

An Infringement on Contract Law

Recently introduced so-called “Right to Work” and other anti-union policies have many of us asking a lot of questions. Like, “Who do unions fund in elections?” and “Why can’t I work some places without belonging to the union?” But many of us fail to ask the root questions; the questions that address the fundamental rights of entities and individuals.

To get closer to these issues we need to start asking: “What right has the government to interfere in an agreement between two parties?” In “Right-To-Work” states, the government puts themselves in a position to void contracts at any point, to over-regulate mutual agreements between parties.

Let’s look at a practical example. Six baristas at Suzie’s Café band together and come to management (Suzie) demanding health care coverage and retirement plan. As part of the new agreement, they also demand that future hires through the end of the contract must also join their coalition. Suzie has the opportunity here to bargain or simply deny the requests of this newly formed union. Lets say, because these are quality employees, that she agrees and signs a contract.

In this scenario, is it really in the scope of government to interfere with this contract? To make it impossible for parties to agree on these terms in the future? Or, in the case of Wisconsin, is it acceptable that the state government say, “Well these employees can bargain for higher pay, but can’t ask their employer (collectively) for a retirement package.”? It seems that this is much less a battle of against corruption and more an infringement on the rights of parties to enter into contracts with one another.

Overbearing Government Regulation

Today our state and federal governments have slowly annexed regulator power in every possible direction. The FCC has recently introduced new regulations on how we get our internet information. The FTC has begun to push for new regulations on how companies can advertise online. The EPA has rewritten the book on over-regulation. The [insert any 3 letter executive branch body] has begun to push for new regulations on [insert previously private aspect of life].

Why then don’t policies that limit our freedom to enter into private agreements, to organize peaceably, to negotiate the terms of our employment… why don’t they get looked at with the same ire from my friends on the side of limited government?

“But it’s My Hard-Earned Tax Dollars”

I think it’s established that private-sector unions ought be acceptable, but many now are suggesting that something inherent to the public sector makes unions bad. Problem is, no one seems to explain well why that is. What is it about the government as employer that makes bargaining for better compensation problematic?

I have heard that the problem occurs because often governments operate monopolistically in some markets. Certainly the government often does operate a monopoly. Schools would be a great example of this. The problem is that where they operate a monopoly the also operate a monopsony. Just as they are the only seller of a produce (education, in the case of schools), they are the only buyer of educator labor. This opens itself to exploitation of the laborers more than exploitation of the buyer of labor. John Merrifield wrote an interesting study on just this idea. He found that, in Texas, monopsony effects of the public education far outweighed monopoly in the market. Teachers were underpaid as a result, what is the equivalent to nearly $3000 annually.

Note: In the case of Wisconsin I want to address another argument I’ve heard that doesn’t really belong here. Folks seem to think because X amount is going toward healthcare, retirement, or the like, it’s fair game for lawmakers to change. The problem with this argument is that employees are given compensation packages. Employers do not care what percentage is going to healthcare and what percentage is going to salary. If we force employees to pay a higher percentage of their healthcare without giving them that money in some other form, we are cutting their compensation.

In Wisconsin they are trying to cut total compensation, then saying, “you legally can’t ask for that back anymore,” by removing their power to bargain for any part of compensation outside of wages. So, as the government cuts their non-wage compensation, teachers will be vilified as they ask to make up the difference in salary increases.

Now, I’m not suggesting that teachers ought to be paid more, given more benefits, or have either decreased. I’m simply arguing that we ought to play by the rules of the market, not take away their right to bargain.

Students’ Best Interest

As someone focusing much of my time on education policy, I see unions demonized by all of my peers. To them all I say: Unions have power in education because we’ve given them power. Unions aren’t corrupting, politicians are just corrupted. Yes, unions are often against reforms that appear to be in the best interest of students. This is true for one reason: they don’t represent students, they represent teachers. The government who promises a free and public education for all citizens are the folks tasked with representing students, and the more they cave to union demands, the less they are successful at their job.

As more and more come out of the woodwork shouting about the great injustice of educators striking or taking “sick days” to demonstrate, I feel the need to shout louder back at them. As a seller of labor, especially when you are often the second wage earner with less mobility (as teachers often are), in a monopoly or oligopoly, you have limited negotiating tools at your disposal. Certainly students are often caught in the crossfire, but to suggest that teachers are wrong to hold out their labor while negotiating is an absurdity.

Lets look at another quick analogy: textbooks. Lets say McGraw Hill is charging $20 per book for biology textbooks to the state of Wisconsin public schools. The state of Wisconsin then says they’ll only pay $17 per book going forward. Would it be wrong of McGraw Hill to not sell them the books? Would it be unjust and unfair to the kids?

Problems with the “Collusion” Argument

So that you all don’t think I’m a total dunce, I want to share one argument against unions that makes me waver. Keeping with theme, I’ll offer an analogy:

If HP, Canon, Lexmark, and Epson CEOs sat around a table tomorrow and decided to set their prices artificially at $500 for a color inkjet printer, would it be legal? The answer is no. This would be collusion. So why isn’t it collusion when sellers of labor get together and set a price? Well, it is and it isn’t. It isn’t because not all laborers join unions. And it is because they do influence prices.

The way I’ve settled this argument internally is by simply deciding that all collusion should be legal.

Conclusion

So, I urge everyone to step back a moment from the rhetoric and emotion in Wisconsin, Indiana, and around the nation and frame the argument just like you would any other government regulation. The government has no place interfering with contract law, collective bargaining, or any other legal agreement between parties—especially when they use these freedoms as scapegoats for their own failure to balance budgets and make good policy.

Marc Oestreich is a former legislative specialist on education and telecommunications, and coordinator of digital media at The Heartland Institute. He is now a marketing manager at Golden Technologies in Valparaiso, Indiana.
Prior to joining Heartland, Marc was a graduate student at Purdue University studying political psychology and education policy. He enjoys defending liberty, writing about education and technology, music, designing websites, and is a fan of the NFL team in Indianapolis. Go Colts!

If private individuals and groupings contract with an employer for whatever, fine. Just why do such arrangements have to elevate and garner the force of law and affect all workers and employees?

David

Mr. Oestreich,

Pray tell how any government entity generates any kind of revenue? That’s right, they don’t. The only way public sector unions can increase their compensation (pay, benefits, pension, etc.) is for the private sector to pay more in confiscatory taxes. Further, when the union membership is not voluntary, as is the paying of the dues in most public sector unions, and then the union member has no say in what those membership dues are used for, then how is that right or proper? Lastly, the relationship between private unions and private corporations is adversarial in nature. That is not the case with public sector unions, which have traditionally supported liberal (notice I avoid the label Democrat) politicians (I’ve heard as much as 95% of public union support to political races goes to the liberal candidate/party). Therefore, when the politicians at the local/county/state level sit down with the union representatives for negotiations, there is no adversarial relationship. Sort of like the fox guarding the hen house.

What say you?

/r
David

Gene

Capitalism puts management and labor in relatively balanced negotiating positions. The absence of capitalism in the public sector tilts the balance heavily in favor of labor. That imbalance is exactly why we see government workers making better pay and more importantly usually considerably more generous benefits than the private sector workers who pay their wages and benefits. As a person who has spent the majority of life in management, I am no fan of organized labor in the private sector, but I will concede their right to exist. There is only one thing I know I agree with FDR on and that is that organized labor in the public sector should not be allowed.

Anonymous

Not just FDR but Meany as well.

Anonymous

Hmm, here’s the problem “I think it’s established that private-sector unions ought be acceptable, but many now are suggesting that something inherent to the public sector makes unions bad. Problem is, no one seems to explain well why that is. What is it about the government as employer that makes bargaining for better compensation problematic?”

Try to look at this more deeply. Because you went way wrong in your analysis of the question you asked.

The State = The People
Therefore, when the people decide that the State (they, themselves) should not deal with unions, that is simply their right not to engage in that activity. As you point out, its exactly the same situation as any private employer saying “No, thanks anyway. I don’t talk to unions. ”

Even if the people were not actively expressing this decision, the reason that it is unfair under the current system for govt employees to engage in collective bargaining is that the taxpayer, who is paying the bill, does not have a seat at the table and is not an equal party to the negotiations. You’d never imagine a private, free-market negotiation going down this way, where the business owner isn’t represented, so why is it okay when we’re talking about government employers?

Aha, you say, “I’ve got you now. The people are represented by their “representative”.”

But, as has become quite clear, this is not the case. Why? Because of self-interest. The politicians can sit at that table and act only in their own personal interest, despite whatever “responsibility” might be owed to the constituents. The unions can sit at that table and act only in their interest. But the taxpayer has no such benefit, and is excluded on this basis from being an equal party. Shouldn’t the one paying the bill be given the power to decide how to spend his own money?

Hey, if we can decide on bond financing by referendum or election, why can’t we determine public employee compensation the same way? That would be really pretty egalitarian if you consider how it works on the union side – after this closed meeting from which the people paying the bill are excluded, the unions go back to their members with a proposed contract and the members vote on it. At the very minimum taxpayers should be allowed the same privilege.

So, if taxpayers were directly bargaining, thus doing a proper job of representing their own interests, as opposed to the current system where politicians use this opportunity to gain political power and votes at the taxpayers expense, then public employee unions would be okay. As long as there is no compulsion by law to do anything or engage in any behavior, we’re still holding to Libertarian principles. We’ll ignore for the argument the fact that the very idea of the State is somewhat anti-Libertarian.

But if you were to suggest such an arrangement to a union supporter, they’d object. Why? Why isn’t what’s acceptable for them not okay for the folks paying the bill? Because they know they would not be able to get the extra benefit that comes from corruption – from getting that politician to exchange his support, for their votes. And that is flat out wrong.

There are some other good reasons that Libertarians might object to the current laws regarding unions, such as the ones compelling employers to negotiate with unions (and engage in a host of activities in that process which they normally would not do in a free market). There is a ton of govt interference via laws regarding collective bargaining. Libertarians cannot defend laws compelling employers to do anything, if what they are espousing as an ideology is a free market in which voluntary behaviors are the only forces.

Georgeg0

But, the government is the employer here. Any employer has a right to negotiate, or not negotiate, as they see fit. In this case the employer is saying it will not engage in collective bargaining over certain things. You can’t claim government interference is the problem when the government is one of the negotiating parties.

Annie

The four year high school graduation rate in Milwaukee is at 50%. What is the rate of return on that investment of my tax dollars? Milwaukee public schools will be 4.9 billion dollars in debt by 2016. Who is going to pay for this debt? Who can pay for this? The school board ignored a 1.5 million dollar debt 10 years ago. But every year, they increased benefits for teachers. Now, we are cutting programs and rethinking benefits. And Scott Walker is evil to be making these cuts? Please think again. This is about a decade of bad governance combined with a failing economy.

Matt

The resent debate is odd to me. The right to collectively bargain and unionize is a law. But it also odd personally because my father was both a union man and a Republican and so is my brother-in-law. They followed the traditions of both and saw it their right to negotiate an aggreable contract (they were in the printer’s union). I realize that unions have generally favored Democrats and the history of anti-unionism in the Republicsb party. But there was a consistency with my father’s position. They were in a small German town that had once abandon the Democrats completely after WW1 because of anti-German discrimination by Wilson. They also appreciated the small businesses of small town life. But they worked in a large business (Pulitzer publishing) and early German immigrants not only founded many trade unions they found it necessary in an industrial culture to maintain personal integrity for their labor. I know that I grew up in a microcosm on this issue but it is no wonder why the younger generation of this small town identifies with libertarians. I am more progressive but my brother is libertarian and I often find myself agreeing with him on many issues.

puffdaddy2

If we pay their salary, shouldn’t we have a say in negotiations with the people we employ? Moreover, how ’bout those test scores in Chicago! Yeah, give those teachers another 19% raise! ‘Cause you know, test scores mean nothing. Just because only 15% of 4th graders can read doesn’t mean the teachers aren’t doing a great job.